Prices of U.S. imports rose last month by the most in almost a year, led by gains in crude oil and natural gas that are likely to keep the Federal Reserve from cutting interest rates.

The 1.7 percent increase was more than twice economists' forecasts and followed a 0.1 percent gain in February, the Labor Department said in Washington today. Prices excluding petroleum rose 0.3 percent. Separate numbers from the department showed jobless claims climbed last week.

The import figures come a day after Fed policy makers released minutes of their March meeting in which they said higher fuel prices may cause some firms to pass costs on to their customers. The Fed added that higher interest rates might even ``prove necessary.''

``It's a pretty inflation-unfriendly piece of data,'' said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. The recent gain in energy costs ``is one of a number factors that has made the Fed more nervous.''

Economists had forecast import prices to rise 0.8 percent, after a previously reported 0.2 percent increase the prior month, according to the median projection in a Bloomberg News survey.

Imports account for about 17 percent of all goods and services purchased in the U.S.

Labor Market

The number of Americans filing first-time claims for unemployment benefits was swollen by the Easter holiday and school spring recess.

Initial jobless claims rose by 19,000 in the week ended April 7 to 342,000, the highest in almost two months, the Labor Department said. The four-week moving average, a less-volatile measure, rose to 323,250 from 316,250.

Holidays such as Easter occur in different weeks each year, making it difficult to adjust the data for seasonal variations, said a Labor Department spokesman. It may take a week or two for the underlying trend in firings to reemerge, economists said.

``The claims numbers tend to get volatile around this time of year, as they can't adjust for Easter and the turn of the quarter,'' said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut. ``We expect claims will slip back down in the next couple of weeks. The labor market is pretty stable.''

The number of people continuing to collect state unemployment benefits rose to 2.527 million in the week that ended March 31, from 2.489 million in the prior week. The dollar and Treasury notes were little changed after the reports.

First of Three

The import-price index is the first of three monthly price gauges from the Labor Department. The government is scheduled to release its measure of producer prices tomorrow and the consumer price index on April 17.

``The recent increases in prices for energy and some non- energy imports likely would boost overall inflation in the near term and might put upward pressure on prices of some core goods and services,'' Fed policy makers said at their March 20-21 meeting, records released yesterday showed.

The Fed minutes said most participants at the policy meeting in March continued to expect inflation excluding food and energy to slow gradually, even as they acknowledged recent price and productivity data ``increased the odds that inflation would fail to moderate as expected.''

The Fed, which kept interest rates unchanged at the last six meetings, has been counting on a slowing economy and declines in energy prices to limit inflation.

Compared with a year earlier, prices of imported goods rose 2.8 percent. Excluding petroleum, prices rose 2.9 percent in the past 12 months.

The price of imported petroleum and petroleum products jumped 9 percent in March after gaining 0.6 percent the prior month. It rose 2.4 percent from the same time a year earlier.

Crude Oil

The average price of a barrel of crude oil traded on the New York Mercantile Exchange rose to $62 on March 1 from $57.30 on Feb. 1. The Labor Department bases its import-price calculations on the first day of the month.

AMR Corp.'s American Airlines, the world's largest carrier, and Delta Air Lines Inc. on March 22 raised fares $5 each way on most U.S. flights to compensate for higher jet-fuel prices. It's the fourth time this year that U.S. airlines have tried to impose a widespread fare boost. AMR and other U.S. carriers have said that first-quarter results were hurt by higher energy costs.

Imported natural gas prices rose 4.7 percent in March after a 4 percent gain in February. Excluding natural gas and other fuels, import prices rose 0.2 percent.

Dollar's Retreat

Weakness in the dollar has made imported goods more expensive. The dollar weakened 4 percent through March from a year earlier on a trade-weighted basis and has fallen about 18 percent since early 2002.

Today's report showed prices for imported consumer goods excluding autos rose 0.2 percent after no change in the prior month. They increased 1.8 percent from the same month last year, the biggest year-over-year rise since January 1996. Prices of imported automobiles, parts and engines rose 0.1 percent after rising 0.2 percent.

Asian automakers are offering incentives to grab market share from U.S. rivals. Toyota Motor Corp., after doubling U.S. sales of its Prius hybrid in March, is offering new discounts worth as much as $2,000 to counter dwindling tax credits and to meet rising sales targets. Toyota's U.S. dealers began providing incentives on option packages for the fuel-saving, gasoline- electric car, the company said in a statement April 4.

Prices for industrial supplies excluding petroleum increased 1.3 percent. The cost of imported capital goods fell 0.1 percent after falling 0.2 percent in February. Those prices rose 0.1 percent from a year earlier.

Prices of goods from China rose 0.2 percent in March. Prices of U.S. exports rose 0.7 percent in March after rising 0.7 percent. Prices of farm exports increased 2.1 percent, while those of non-farm exports rose 0.6 percent. (Bloomberg)